Kent Street Pty Ltd & Ors v Department of Natural Resources and Mines - [2008] QLAC 221

LAND APPEAL COURT OF QUEENSLAND

CITATION:

Kent Street Pty Ltd & Ors v Department of Natural Resources and Mines [2008] QLAC 0221

PARTIES:

Kent Street Pty Ltd (ACN 006 794 654) as Trustee; Westfield Management Limited (ACN 001 670 579) as Responsible Entity of Westart Trust, AMP Pacific Fair Pty Ltd as Trustee and Westfield Management Limited (ACN 001 670 579) as Responsible Entity.

Appellants

v

Chief Executive, Department of Natural Resources and Mines

Respondent

FILE NO:

LAC 2007/0033

DIVISION:

Land Appeal Court of Queensland

PROCEEDING:

Appeal

ORIGINATING COURT:

Land Court of Queensland

DELIVERED ON:

19 December 2008

DELIVERED AT:

Brisbane

THE COURT:

White J
Mrs CAC MacDonald, President of the Land Court
Mr RS Jones, Member of the Land Court

ORDERS:

1.   The appeal is allowed.

2.   The order of the Court below is set aside.

3.   The unimproved value of Lot 13 on Registered Plan 866294, Parish of Gilston as at 1 October 2002 is determined at Forty Seven Million Four Hundred and Ninety Thousand Dollars ($47,490,000).

CATCHWORDS:

STATUTES – ACTS OF PARLIAMENT – INTERPRETATION – CONSIDERATION OF EXTRINSIC MATTERS – PREVIOUS STATE OF LAW AND MISCHIEF TO BE REMEDIED – this Court had previously given a decision dealing with many of the issues agitated in the appeal – Parliament amended the applicable legislation, the Valuation of Land Act 1944 (Qld), after the previous appeal, and after the primary decision in this matter – the amendments to the legislation had retrospective effect – the amendments appear to be targeted at altering the outcome of this appeal - whether regard can be had to extrinsic material relating to the amendments in construing the Valuation of Land Act 1944 (Qld)

REAL PROPERTY – VALUATION OF LAND – UNIMPROVED VALUE – VALUE OF IMPROVEMENTS – valuation of land under the Valuation of Land Act 1944 (Qld) – the Act requires that the valuation be conducted by assuming that at the time of valuation the land is unimproved – whether the valuer is to assume that existing leases continue over the unimproved land – whether the valuer is to assume that the existing leases will exist immediately after the time of valuation

REAL PROPERTY – VALUATION OF LAND – UNIMPROVED VALUE – GENERALLY – valuation of land under the Valuation of Land Act 1944 (Qld) – the Act requires that the valuation be conducted by assuming that at the time of valuation the land is unimproved – whether the valuation is conducted on the assumption that after the time of valuation the improvements can be restored without any risk

REAL PROPERTY – VALUATION OF LAND – UNIMPROVED VALUE – GENERALLY – valuation of land under the Valuation of Land Act 1944 (Qld) – the valuer must assess the capital value of the fee simple of the land – whether the value of the fee simple includes the value of leases over the land

PROCEDURE – DISCOVERY AND INTERROGATORIES – DISCOVERY AND INSPECTION OF DOCUMENTS – DISCOVERY OF DOCUMENTS – GENERALLY – the appellant applied to introduce certain documents as fresh evidence – whether the respondent had a duty to disclose those documents – whether the fresh evidence should be admitted

Acts Interpretation Act 1954 (Qld), s 14B, s 20
Land Court Act 2000 (Qld), s 56
Uniform Civil Procedure Rules 1999 (Qld), r 211, r 223
Valuation of Land Act 1944 (Qld), s 3, s 5, s 6, s 13, s 45, s 101, s 101A,

Barnwell v Valuer General [1989] 13 QLCR 13 at 17, cited
Brisbane City Council v Valuer General (1975) 2 QLCR 254, referred to
Brisbane City Council v Valuer General (1978) 140 CLR 41, cited
Commissioner for Prices and Consumer Affairs (SA) v Charles Moore (Aust) Ltd (1977) 139 CLR 449, cited
Commissioner of Land Tax v Nathan (1913) 16 CLR 654, discussed
Commonwealth Custodial Services Ltd v Valuer General [2007] NSW CA 365, cited
Daniell v Federal Commissioner of Taxation (1928) 42 CLR 296, discussed
Determination of Valuer General v Shire of Esk (1972) 39 CLLR 130, applied
Fischer v Valuer General [1983] 9 QLCR 44, cited
Gollan v Randwick Municipal Council (1961) AC 82, referred to
Grahn v Valuer General [1992] 14 QLCR 327, cited
Kiddle v Deputy Federal Commissioner of Land Tax (1920) 27 CLR 316, cited
Lamb v Brisbane City Council (2006-2007) 152 LGERA 100, cited
McGeoch v Federal Commissioner of Tax (1929) 43 CLR 277, cited
Perpetual Trustee Co. v Valuer General (No. 2) (2007) SASC 340, discussed
PT Limited & Anor v Department of Natural Resources and Mines [2006] QLC 0068, related
PT Limited & Anor v Department of Natural Resources and Mines [2007] QLAC 77, related
Royal Sydney Golf Club v Federal Commissioner of Taxation (1955) 91 CLR 610, discussed
Spencer v the Commonwealth (1907) 5 CLR 418, distinguished
State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146, distinguished
Tetzner v Colonial Sugar Refining Co Ltd (1958) AC 50, cited
The Valuer General v Fenton Nominees Pty Ltd (1982) 150 CLR 160, referred to
Toohey's Ltd v Valuer General (1925) AC 439, referred to
Trust Co of Australia Ltd & Anor v Valuer General (2008) SASC 169, discussed
Trust Co of Australia Ltd v Valuer General (2007) 154 LGERA 437, cited
Yevad Products Pty Ltd v Brookfield [2005] FCAFC 177, discussed

APPEARANCES:

Mr S Doyle SC and Mr R Traves SC and Mr JM Horton of counsel for the appellants

Mr DB Fraser QC and Mr P Flanagan SC and Mr T Quinn and Mr G Del Villar, for the respondent

SOLICITORS:

Mr R Bowie and Mrs A McDonnell – Minter Ellison Lawyers for the appellants

Dr G Sammon of Crown Law, for the respondent

Pursuant to s.45(1) of the Valuation of Land Act 1944 (VLA) the appellants appealed against the respondent’s assessment of the unimproved value attributed to their land as at 1 October 2002 in the amount of $90,000,000.

The appellants represent, respectively, the owners of the subject land and the managers and operators of a "super" regional shopping centre located on that land. For the purposes of this appeal it is unnecessary to unravel the actual relationship between these companies and it is convenient to refer to them collectively as the appellants.

Background

The land comprises an area of 16.64 ha, located at 2 Hooker Boulevard Broadbeach on the Gold Coast and was and is developed as a major regional shopping complex known as the Pacific Fair Shopping Centre (“Pacific Fair”). The physical characteristics of the land and of the shopping centre are set out in some detail in the reasons of the learned Member below[1] and it is not necessary for the determination of this appeal to repeat them here.
[1][2007] QLC 0011 at paras [11] – [18]: (Reasons for Judgment "RJ").

In the proceedings below, the Court heard evidence about the unimproved value of the land the subject of this appeal and of other land upon which another regional shopping centre is located, the Chermside Shopping Centre at Chermside Brisbane. Those proceedings occupied 55 days hearing time and produced a transcript in excess of 5,000 pages. Six senior counsel and four junior counsel were involved. Twenty seven witnesses were called most of whom were experts. Two hundred and seventy nine exhibits were tendered many of which were extensive reports of the experts.

Although for the purposes of this appeal the Court is concerned with the unimproved value attributed to the subject land, a number of the facts, circumstances and legal arguments raised in the proceedings concerning the Chermside land were agitated one way or another in this appeal. More will be said below about the Chermside proceedings.

The approach adopted by the respondent in valuing the subject land has an interesting history as recorded by the learned Member below:[2]

"The valuation of the subject land issued in the amount of $180,000,000; a substantial increase over that of $40,000,000 which applied as at 1 October 2001. Following objection the valuation was reduced to $90,000,000 for reasons stated as, 'the valuation required calculation by a different methodology'. That methodology was purported to rely on s.3(2) of the Act and paying regard to amendments which took effect on 2 June 2003 but which had retrospective effect with regard to the 2002 valuation. Evidence was then led before me from the respondent to a valuation of $160,000,000 or $127,400,000, then to $155,100,000 and finally to $255,000,000.…"

An equally uncertain or variable approach to the valuation of the Chermside land was also adopted by the respondent.[3]

[2]Ibid at para [2].

[3]See PT Limited & Anor v Department of Natural Resources and Mines [2007] QLAC 77 at paras [5]. (the Chermside appeal).

Dissatisfied with all of the respondent's valuations the appellants appealed to the Land Court contending for an unimproved value of $40,000,000.

The learned Member determined the unimproved value of the land as at 1 October 2002 in the amount of $128,200,000. The appellants appealed to this Court contending for a figure, on their best case, of $39,400,000 or, at worst, of $46,700,000. These figures do not appear to include any value the existing development approvals may give to the land.

The valuation under appeal was purportedly undertaken pursuant to s.3(1)(b) of the VLA.

The Chermside Proceedings and This Appeal

In an earlier decision,[4] the learned Member determined the unimproved value of the land accommodating the Chermside Shopping Centre, as at 1 October 2002, in the amount of $112,000,000. Hereafter that decision will be referred to as the "Chermside case". That decision was pivotal to the determination of the learned Member concerning the subject land as paragraphs 68 and 69 of his reasons reveal:
[4]See PT Limited & Anor v Department of Natural Resources and Mines [2006] QLC 0068. (The Chermside case).

"[68]Given the conclusions I have drawn on the sales evidence and Mr Montgomery's valuation method, I will rely on the value relationship between Chermside and Pacific Fair in striking a valuation figure for the latter property on a site improved basis. I stress that this is not proceeding by way of relativities as discussed at [226] herein – a method of last resort in cases such as this. The value of the Chermside land has already been determined in the Chermside decision. The process I am adopting is that of comparing the Chermside land, at its determined value, with the subject property. The evidence leads me to the view that, in this respect, Mr Brett's opinion should guide me in terms of the measure of relativity whilst the rank ordering of value in that respect is agreed with by Mr Montgomery. The relativity of values was something to which Mr Brett specifically put his mind and which he supported with some points of comparison.
[69]In the Chermside decision it was concluded that site improvements for the purpose of comparison with Burwood should be added to the unimproved value in an amount of $20,988,000. I adopt that figure for the purpose of the present reasons. The unimproved valuation was determined in the Chermside decision at $112,000,000. The site improved value for the purpose of comparison with Pacific Fair, also treated on the site improved basis, is therefore $132,988,000. That equates to $965 per m² of land area. Mr Brett's differential places Pacific Fair at about 2.85% higher than Chermside on a land area basis. If I apply that directly to the Chermside site value of $965 per m², the figure becomes $992.50 per m² which would calculate to an overall value of Pacific Fair of $165,152,000. I will round that down to $165,000,000 given my earlier observation that the 2.85% figure was apparently the product of some rounded figures. The site improved value of Pacific Fair is therefore $165,000,000. … I will now direct my mind to the site improvements which need to be deducted from this figure." (emphasis added)

After a detailed analysis of the evidence the learned Member concluded that the value of the site improvements on the subject land was $36,804,234 resulting in an unimproved value of $128,200,000. (i.e. site improved value of $165,000,000 less value of site improvements rounded to $36,800,000).[5]
[5]RJ para [117].

The owners of the Chermside land appealed the decision of the Land Court in the Chermside case to this Court. The appeal was successful and the unimproved value of that land was reduced from $112,000,000 to $34,000,000. An appeal against that decision was filed in the registry of the Court of Appeal by the respondent but later withdrawn. Hereafter, the decision of this Court concerning the Chermside land will be referred to as the "Chermside appeal."[6]
[6]PT Limited & Anor v Department of Natural Resources and Mines [2007] QLAC 77.

In reaching the figure of $34,000,000 in the Chermside appeal, this Court determined the site improved value of the Chermside land to be $59,254,000.

There was no challenge to the approach adopted below in these proceedings of using the multiplier or site differential of 2.85% to calculate the relative differences between the value of the subject land in comparison with that of the Chermside land.

In circumstances where there was no appeal against the decision of this Court about the unimproved value and/or the site improved value of the Chermside land and no challenge to the multiplier or site differential approach adopted by the learned Member below in these proceedings, the appellants would have had every right to be reasonably optimistic about the outcome of this appeal.

It was, of course, open to the respondent to challenge the decision of this Court in the Chermside appeal in the Court of Appeal. Instead, the Minister for Natural Resources and Water initially sought to “water down”, if not defeat entirely, the force and effect of the decision. This purported intention is clear from a perusal of the second reading speech of the Minister[7] and the Explanatory Notes[8] accompanying the Valuation of Land Amendment Bill (2008) as first drafted and the introduction of Part 9 Division 2, s.101 into the VLA.
[7]At p. 335.
[8]At pp. 8.9 – 9.1 and 13.3 – 13.7.

It should also be noted that the 2008 amendments to the VLA were introduced and enacted after the appellants had filed their notice of appeal in these proceedings but before the appeal was heard. Further, the VLA as amended is retrospective in its operation so that it is the Act as amended that the appellants now have to contend with not the Act as it was at the time the appellants' case was heard in the Land Court and the Chermside appeal was determined by this Court. Such legislative intervention clearly intended to affect ongoing litigation is most unusual. More will be said below about the retrospective operation and effect of the amendments.

The Indexed Valuation

Before turning to the substantive matters to be resolved, mention should be made here of the respondent's valuation of the subject land said to have issued pursuant to s.101A of the VLA in its present form.

For the purposes of this appeal it is not necessary to go into the details of this valuation other than to identify that:

(i) the subject land, along with a number of other major shopping centre sites, is designated "Prescribed Land" for the purposes of the VLA.

(ii) Section 101A of the VLA is said to provide for, as at the same valuation date relevant to this appeal, the application of a so called "indexed valuation" which is to be calculated in accordance with formulae provided in s.101A.

(iii) In circumstances where prescribed land has been issued with an annual valuation (i.e. in accordance with the VLA as it stood prior to the 2008 amendments) and an indexed valuation under s.101A of the Act as amended, the lesser of the two valuations applies.[9]

[9]S.101A(2) and (3).

The annual valuation before this Court is that determined by the learned Member below in the amount of $128,200,000. The respondent seeks to defend that valuation and the appellants want this Court to substitute a valuation of between about $40,000,000 to $47,000,000.

Notwithstanding the written and oral submissions made on behalf of the respondent in defence of the annual valuation under appeal, on 17 June 2008, he issued an indexed valuation in the amount of $47,800,000.[10] Thus the respondent, while seeking to defend it, does not actually intend to have the appellants subjected to taxation on the annual valuation of $128,200,000 but on the lesser amount of $47,800,000. No submissions were made or evidence led in defence of the indexed valuation by the respondent or in challenge by the appellants.
[10]See exhibit GPS 5 of the affidavit of Dr GP Sammon filed 30/7/2008.

The Valuation of Land Act 1944 and the Chermside Proceedings

In the Chermside litigation, in the proceedings before the Land Court and the Land Appeal Court s.3 of the VLA relevantly provided:

"3. (1) For the purposes of this Act –
‘unimproved value’ of land means –

(a)in relation to unimproved land – the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require; and

(b)in relation to improved land – the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time as at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist.

(2)However, the unimproved value shall in no case be less than the sum that would be obtained by deducting the value of improvements from the improved value at the time as at which the value is required to be ascertained for the purposes of this Act." (emphasis added)

Pursuant to amendments to the VLA made in 2003, the concept of "intangible improvements" was introduced. In s.6(1) of the VLA, under the heading "Meaning of improvements", "intangible" improvements were included, and were defined in s.6(5) as follows:

"(5) In this section—
intangible improvements, in relation to land, include the benefit of —
(a) the following non-physical improvements to the land ‑

(i) a lease, licence or other right;
(ii) the goodwill associated with the purpose for which the land is being used; and

(b) other non-physical improvements prescribed under a regulation" (emphasis added)

Relevantly, the Valuation of Land Regulation 2003 provided in s.3:

"Non-physical improvements that are intangible improvements—Act, s.6(5)
For s.6(5) of the Act, definition intangible improvements, paragraph (b), the following non-physical improvements are prescribed –
(a)risk management procedures in place for a development on the land, including, for example, procedures dealing with the following –

(i)         capturing and retaining a share of the market;
(ii)        turnover of tenants;
(iii)       establishing a stable and quality mix of tenants;

(b)market advantages resulting from the business skills of the owner or manager of a development on the land;

(c)market advantages of a brand name used for a development on the land."

In deciding the Chermside case against the appellants the learned Member made two crucial findings. First, that the amendments to the VLA to include "intangible" improvements in the definition of improvements in s.6 of the Act, had no effect on the operation of s.3(1)(b). Second, in purported accordance with the decision of the High Court in Commissioner of Land Tax v Nathan,[11] once the land had been actually developed to achieve its highest and best use, any risks associated with such development of the land in its notionally unimproved state have been met and that benefit merged with the value of the land.[12]
[11](1913) 16 CLR 654.
[12]Chermside case at para [777].

For reasons relevant to this appeal, which will be dealt with in more detail below, this Court allowed the appeal against the decision of the learned Member. It did so for three reasons. First, when regard was had to the relevant provisions of the VLA it was not open to exclude from the meaning of "improvements", where it appears in s.3(1)(b), intangible improvements as defined in s.6(5) of the VLA.[13] Second, the learned Member erred in interpreting and applying the principles enunciated in Nathan's case when determining the exercise the valuer was required to undertake pursuant to s.3(1)(b) of the VLA. In this context the Court said:[14]
[13]Chermside appeal at para [18].
[14]See at para [57].

"[57]From this review of the authorities it is clear that Nathan should not be considered authority for the construction of s 3(1)(b) contended for on behalf of the respondent and adopted by the learned Member in his application of the so described ‘Nathan formulation’. Consistently with the approach adopted in Queensland Club and in Clough, the valuation exercise required under s 3(1)(b) for the subject land requires the valuer to proceed on the basis that, as at 1 October 2002, the improvements (including intangible improvements) did not exist and had never existed. However, the land is to be otherwise valued having regard to the environment in which it does exist. Relevantly for the subject land, that would include the services and amenities available to the land, any favourable and unfavourable statutory and/or local government rights or restrictions and, of particular importance in this case, the demographic features likely to influence the ability to attract an appropriate customer base and mix of tenants. …"

The third error flowed from the first two. The learned Member, because of his findings on the statutory construction point and the application of Nathan's case, concluded that a sale of land adjoining the Chermside site was not reliable evidence of the unimproved value of that land. That sale was referred to as the "Telstra" sale. This Court considered that in the circumstances of that case it was, in fact, the best evidence of value.

The 2008 Valuation of Land Act Amendments – A Short History

At the time these proceedings were dealt with in the Land Court, the relevant provisions of the VLA were as set out in paragraphs 22, 23 and 24 above. Hereafter the proceedings in the Land Court will be referred to as the "Pacific Fair case".

However, on 26 February 2008, following this Court's decision in the Chermside appeal, the Minister for Natural Resources and Water introduced a number of proposed amendments to the VLA. The relevant proposed amendments were to amend s.3 of the VLA by introducing new subsections (2A), (2B) and (2C) and to introduce a new subsection (c) to s.3(4) of the Act.

Had those amendments been proceeded with s.3 of the Act would have read as follows:

"3. Meaning of unimproved value
(1) For the purposes of this Act –
‘unimproved value’ of land means –
(a)(as was).

(b)(as was).

(2)(as was).

(2A) The assumption mentioned in subsection (1), definition unimproved value, paragraph (b) is limited to the notional removal of the improvements only as at the time of valuation.
(2B)For subsections (1) and (2), the unimproved value of land includes any increase in the value of the land that has happened in connection with—
(a) the making or use of an improvement to the land; or
(b)a local planning instrument; or
(c)a development approval or other approval or authority under an Act, other than a hotel licence, relating to the land or an improvement of the land. (emphasis added)

(2C)Nothing in subsection (1) or (2) requires an assumption, in relation to improved land, that the improvements have never been made.
(3)(as was).
(4)(a) (as was)
(b)(as was)
(c)There is no risk in realising the use of the land, or continuing the use of the land, for any purpose for which it is being used at the date to which the valuation relates. (emphasis added)
… "

The reasons for these amendments were identified in the Explanatory Notes accompanying the Valuation of Land Amendment Bill 2008 as then proposed under the heading "Clarify the Definition of Unimproved Value":

"The definition of 'unimproved value of land' in relation to improved land is proposed to be changed in order to clarify that the approach taken by the High Court in the Nathan case is established as the law in relation to valuations done under the VOL Act.
These amendments will do this by confirming that:
§ the assumption required to be adopted in determining the unimproved value of improved land does not extend to mean that the history of the land of the subject land is ignored;
§ the unimproved value of land includes any increase in the value that results from;
·the making or use of an improvement; or
·a local planning instrument; or

· a development approval, or other approval or authority other than a hotel licence, relating to the land or an improvement on the land;
§ there is no requirement to make an assumption that the improvements have never been made;
§ the chief executive disregards any risk in realising the current use of the subject land.
…" (emphasis added)

An extraordinary element of the amendment Bill was the introduction of new Part 9 Divisions 2 and 2A to the VLA. Part 9 Division 2 introduced s.101 into the Act:

"101 Non-commencement of legislation

(1)The Valuation of Land Amendment Act 2003 No. 35 is taken to have never commenced.

(2)Subsection (1)—
(a)does not apply for the purpose of a legal proceeding decided before the commencement of this section; and
(b)otherwise applies for all purposes, including an objection or decision made, or legal proceeding (including an appeal from a legal proceeding mentioned in paragraph (a)) started but not decided, before the commencement of this section.

(3)The Natural Resources and Other Legislation Amendment Act 2004 No. 4, section 56C is taken to have never commenced." (emphasis added)

Clearly s.101(2)(b) is targeted at specific litigation including this appeal. Parliament chose not to repeal the sections of the VLA of concern but to deem that they "…have never commenced…". In that manner it seems clear that Parliament intended to remove from the appellants any rights they might have had or that had been preserved under s.20(2)(b), (c) and (e) and 20(3) of the Acts Interpretation Act (1954). The Court is not aware of any previous examples of legislative amendment targeted at specific tax payers in Queensland and none were identified during the conduct of this appeal.

Some of the taxpayers likely to be affected by the proposed amendments to the VLA were quick to react and sought changes to the Bill as originally proposed. The concerns of the representatives of this group of taxpayers are set out in the second set of Explanatory Notes to the second amendment Bill in the following terms:

"Objectives of the Amendments
The objectives are as follows:
1To clarify that invisible improvements related to the value of the business that is conducted on the land are not to be included in the unimproved value of land.
•The Property Council of Australia (PCA), Shopping Centre Council of Australia (SCCA) and Australian Property Institute (API) have raised concerns about the potential for the proposed amendments effectively moving invisible improvements related to the business conducted on the land, from improvements, which are not included in the unimproved value, to the unimproved value of the land. This is not intended, but could possibly be interpreted as such with the present wording of the amendment. …" (emphasis added)

How the "objectives" of the amendments to the Bill as originally proposed were to be achieved were set out at page 2 of the second set of Explanatory Notes in the following terms:

"The objectives will be achieved by the following:
Clarify that invisible improvements related to the value of the business conducted on the land are not included in the unimproved value by modifying clauses 5 and 7. This will remove the terminology which is subject to different interpretations.
…
Remove the clause that states that there is no risk in realising the use of the land or continuing the use of the land for any purpose for which it is being used. This will require an amendment to clause 5." (emphasis added)

Relevant to this appeal, the proposed amendments to s.3 of the VLA were changed by the deletion of the proposed subsections (2B)(a) and (4)(c). The changes were to the following effect:

"Section 3 …
…
(2B)For subsections (1) and (2), the unimproved value of land includes any increase in the value of the land that has happened in connection with—
~~(a)the making or use of an improvement to the land; or~~
(a)a local planning instrument; or
~~(c)~~(b) a development approval or other approval or authority under an Act, other than a hotel licence, relating to the land or an improvement of the land.

(3)…

(4)Notwithstanding anything contained in this section, in determining the unimproved value of any land it shall be assumed that—
(a)the land may be used, or may continue to be used, …
(b)such improvements may be continued or made on the …
(c)~~there is no risk in realising the use of the land, or continuing the use of the land, for any purpose for which it is being used at the date to which the valuation relates.~~"

The Valuation of Land Act and the Subject Proceedings

Following the amendments, s.3 of the VLA provides:
"3 Meaning of unimproved value
(1) For the purposes of this Act—
unimproved value of land means—
(a)in relation to unimproved land—the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require; and
(b)in relation to improved land—the capital sum which the fee simple of the land might be expected to realise if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming that, at the time as at which the value is required to be ascertained for the purposes of this Act, the improvements did not exist.
(2)However, the unimproved value shall in no case be less than the sum that would be obtained by deducting the value of improvements from the improved value at the time as at which the value is required to be ascertained for the purposes of this Act.
(2A)The assumption mentioned in subsection (1), definition unimproved value, paragraph (b) is limited to the notional removal of the improvements only as at the time of valuation.
(2B)For subsections (1) and (2), the unimproved value of land includes any increase in the value of the land that has happened in connection with—
(a)a local planning instrument; or
(b)a development approval or other approval or authority under an Act, other than a hotel licence, relating to the land or an improvement of the land.
(2C)Nothing in subsection (1) or (2) requires an assumption, in relation to improved land, that the improvements have never been made.
(3)In addition, the restrictions and limitations in any deed of grant or certificate of title in respect of any racecourse shall be disregarded in ascertaining the unimproved value of the land of the racecourse concerned.
(4)Notwithstanding anything contained in this section, in determining the unimproved value of any land it shall be assumed that—
(a)the land may be used, or may continue to be used, for any purpose for which it was being used, or for which it could be used, at the date to which the valuation relates; and
(b)such improvements may be continued or made on the land as may be required in order to enable the land to continue to be so used;
but nothing in this subsection prevents regard being had, in determining that value, to any other purpose for which the land may be used on the assumption that any improvements referred to in subsection (1) had not been made."
To adopt the expression employed by Mr Doyle SC, for the appellants, s.101 of the VLA had the effect of "reversing out" of the Act the specific inclusion of intangible improvements within the definition of improvements in s.6 of the Act.

In the Chermside appeal this Court, agreeing with the learned Member below, said[15]

"… As the learned Member correctly concluded, any gap between the market value of the subject shopping centre as a going concern and the value of the land together with the value of the physical and tangible improvements on the land will, to a significant extent, be attributable to facts, matters or circumstances likely to fall within the meaning of intangible improvements for the purposes of the VLA."

[15][2007] QLAC 0077 at para [61].

The "gap" referred to above would encompass many (if not most) of those intangibles associated with the market value of a business as a going concern falling under the general description of "goodwill". We agree with the reasoning of the learned Member in the Chermside case[16] and his adoption of the following quote: "Expressed at its simplest level goodwill is calculated as the difference between the value of the entity as a whole and the value of its NTA (net tangible assets)"[17]
[16][2006] QLC 0068 at paras [556] to [558], [561] and [563].
[17]"The Valuation of Businesses, Shares and Other Equity" (W. Lonergan 2^nd Ed. 1998 at p.43.)

As to the elements or factors of the goodwill associated with a regional shopping centre, the learned Member in the Chermside case accepted the evidence of a Mr Rumbold, one of the expert witnesses relied on by the appellants.[18]
[18][2006] QLC 0068 at para [557].

"In those terms what is goodwill? I think that is answered in the evidence of Mr Rumbold where he said:
‘A successful shopping centre generates and builds goodwill over time. That is to say, the shopping centre has a value significantly greater than its physical assets alone.’

The goodwill of an established shopping centre is a result of a range of contributing factors that include:
·    Trading history of the centre
·    Customer loyalty and shopping preferences
·    Market recognition
·    Brand strength
·    Competitive advantages
·    Tenant mix.
These factors and perhaps others contribute to the underlying success and therefore value of a shopping centre. The value they add can reasonably be described as 'goodwill'."

It has not been argued on this appeal that this evidence of Mr Rumbold should not now be accepted.

As discussed above, in determining the unimproved value of the Chermside land under the VLA as it then was, the learned Member concluded that when carrying out the valuation exercise under s.3(1)(b), the valuer could treat the site as being essentially risk free for a regional shopping centre development. This Court disagreed. As the decisions in the Chermside case and Chermside appeal reveal, the practical consequences in dollar terms of the differences in approach are enormous.

In this appeal, the position of the respondent is, essentially, that the amendments to the VLA mean the Chermside appeal is no longer good law, and the amendments have the effect of reinstating the full force and effect of the decision of the Land Court.[19] The appellants disagree.
[19]Appeal transcript T28 L30, T30 L1 – L15.

Central to the case for the appellants are the following propositions: first, as the valuation exercise under s.3(1)(b) of the VLA requires as at the date of valuation the assumption that the improvements did not exist, then, too, it must be assumed that the leases associated with those improvements do not exist. Second, the valuation exercise urged by the respondent ignores the requirement for the valuer to assess the value of the “fee simple” of the land in the notional state required under s.3(1)(b). Third, that under the same valuation exercise it would be wrong for the valuer to assume, despite the successful trading history of the shopping centre, that any improvements on the land (deemed not to exist on the valuation date) would be capable of being replaced immediately after that date free of any business risk. Fourth, the construction of s.3 of the VLA contended for by the respondent would amount to an unintended imposition of a tax on entrepreneurial skill and effort.

These propositions were rejected by the respondent in his written submissions.[20] However, his position is more completely understood by reference to the oral submissions made by Mr DB Fraser QC. The following exchanges took place:[21]
[20]e.g. at paras 36 to 43 and 89.
[21]Appeal transcript T 40 l 10 to 42 l 5.

MR FRASER: In the case of the improved property the Act requires that the value be assessed certainly under the legislation as it now stands, on the basis that the improvements will be notionally taken away, but only for the instant of valuation, and they'll be there tomorrow. And having regard to ordinary principles of valuation, whatever development premium has accrued to the property by being successfully developed, that is there are tenants in there, who the valuer looking at it assesses it are paying market rent then whatever increment to the value of the land in its unimproved state has been added by the successful developer - I think our learned friend's referred to as entrepreneurial premium, I think, but - or sometimes in prospect called profit and risk, you make an assessment of how the project will go. But to the extent that that premium has been added, the process required by the Act under section 3(2) is that the improved value, including the premium, will be identified and the added value of the improvements will be subtracted, leading to a residual value which will include the premium because there's no occasion to take that premium off. Under the section 3(1)B scenario, it's essentially the same exercise, but without the modifications imposed by section 5(2) and the other provisions that put limits on what can be done in relation to the added value. And that-----
MR JONES: I was going to say, but a necessary implication of that submission is that the Act will be imposing a tax on an entrepreneurial skill.
MR FRASER: Well, if one has regard to the trading history that is a reflection of the entrepreneurial skill because the trading history is what those who have developed the site have been able to achieve.
HER HONOUR: So it is a bit of a fiction to talk about unimproved value. If on the scenario that Mr Jones gave you will paying more tax if you've got vacant land than if you have in fact got improved - highly improved land even though you're calling it notionally tax on the unimproved value.
MR FRASER: I'm sorry, did you say there would be more tax on the unimproved land?
HER HONOUR: No, on the improved site.
MR FRASER: Oh yes, but that is just a reflection that the potential of the land has been realised by its development. …
MR JONES: I understand that but it just seems to me that a fundamental consequence of your submission is that at the end of the day it does result in a tax on entrepreneurial effort and skill and from my reading of a number of cases that has been contrary to the traditional approach of the Courts in assessing what unimproved value is about.
MR FRASER: Well, under the section 3(2) approach it is a necessary result as I think we've - I've endeavoured to demonstrate to the members of the Court. And the question is well why would it be expected that in the exercise under 3(1)(b) the Legislature would be trying to achieve anything different. Indeed, the prescription is that it shan't be less than the amount able to be identified under section 3(2) which is a very strong indication that whatever development premium has attached to the land will find its way into the valuation of the land for taxing purposes.

And in terms of entrepreneurial effort it will involve considerations of, for example, prudent entrepreneurs. I mean, the unsuccessful one won't be taxed. The instance that your Honour gave about looking at the trading history and seeing it has failed, well, that person won't be asked to pay any more in consequence.
The - I really think that addresses the issue of the comparison and if one is asking, well, why is the entrepreneurial effort as you, Mr Jones, has described it, why is that going to be taxed, it is because the circumstances that the entrepreneur who has developed the land will sell it for a great price. The investor, for example, will take the property and pay a price based upon the amount of return that can be generated from the property.
The developer has proved up the potential of the land and that potential is able to be recognised in the valuation process because there is certainty - that is the trading history has demonstrated that there is the elimination of risk as to whether a project will be successful or not.
And it is no surprise. I mean, for example, one might say, well, what is the point of identifying the highest and best use of a large parcel of land as being a regional shopping centre. No doubt it flows ultimately from the skills of an entrepreneur - a number of entrepreneurs who have got together a large parcel of land and achieved statutory approvals to enable them to do it, (should) have run shopping centres successfully over a many years
And by that process they attract goodwill to their properties and that goodwill can then be represented by an increase in the purchase price. Ultimately, however, it is supported by the concept of market rents because it doesn't matter how clever you are, if the tenants can't trade successfully, they won't be able to pay the rent and your shopping centre won't perform well." (emphasis added)

It seems clear from these submissions that the respondent’s position is that the assessment of the unimproved value under s.3(1)(b) of the VLA is now to include material elements of what would ordinarily be part of the goodwill of the business being conducted on the land.[22] The valuation exercise required to be undertaken pursuant to s.3(1)(b) was articulated by Mr Fraser in the following way[23]:

"In effect it's inquiring as to the amount which would be exchanged if the purchaser wasn't required to pay for the improvements. That's the result you get by deducting the value of the improvements from the improved value and that's endorsed in (Morrison) and in the Commonwealth Custodial case I've taken the Court to and in a variance what section 3, subsection 2 requires."

This approach appears to be materially the same as that contemplated under s.3(2) of the VLA. More will be said about that particular issue below.

[22]See also at T43 L1-12, T48 L1-L38 (day 2).

[23]Appeal transcript T78 L30-L40. See also T46 L5-L30, T77 L1-L60, T78 L5-40, T76 L10-22.

The Extrinsic Material

The appellants contend that to ascertain what Parliament intended by the amendments to the VLA, regard could and should be had to the changes made to the Valuation of Land Amendment Bill and the Explanatory Notes after its introduction and debate in Parliament on 26 February 2008.

The respondent resists this approach arguing that while regard can be had to "explanatory memorandum" to ascertain the mischief sought to be remedied by the amendments, no regard should be given to the Bill as it was when first introduced into Parliament. There are essentially two reasons advanced in support of this position. First, the so called general rule is that resort should not be had to drafts of Bills even if introduced into Parliament. Second, as no ambiguity, uncertainty or obscurity arises out of the ordinary and natural meaning of the VLA as amended, there is no need to have regard to such material.[24]
[24]RWS, para 29(c) and (d).

In support of the first of these arguments the respondent relies on statements made by Gibbs J in Commissioner for Prices and Consumer Affairs (SA) v Charles Moore (Aust) Ltd.[25] Whatever may have been the position in the past there is now no general rule which prevents this Court having regard to the history of the amendments to the VLA where appropriate. Section 14B of the Acts Interpretation Act 1954 governs the approach which this Court ought adopt in deciding whether or not it should have regard to extrinsic material.
[25](1976-77) 139 CLR 449 at 461 – 462.

Section 14B of the Acts Interpretation Act 1954 provides:

"Use of extrinsic material in interpretation
(1) Subject to subsection (2), in the interpretation of a provision of an Act, consideration may be given to extrinsic material capable of assisting in the interpretation—
(a)if the provision is ambiguous or obscure—to provide an interpretation of it; or
(b)if the ordinary meaning of the provision leads to a result that is manifestly absurd or is unreasonable—to provide an interpretation that avoids such a result; or
(c)in any other case—to confirm the interpretation conveyed by the ordinary meaning of the provision.

(2)In determining whether consideration should be given to extrinsic material, and in determining the weight to be given to extrinsic material, regard is to be had to—
(a)the desirability of a provision being interpreted as having its ordinary meaning; and
(b)the undesirability of prolonging proceedings without compensating advantage; and
(c)other relevant matters.

(3)In this section—
extrinsic material means relevant material not forming part of the Act concerned, including, for example—

…
(e)an explanatory note or memorandum relating to the Bill that contained the provision, or any other relevant document, that was laid before, or given to the members of, the Legislative Assembly by the member bringing in the Bill before the provision was enacted; and
(f)the speech made to the Legislative Assembly by the member in moving a motion that the Bill be read a second time; and …"

When the natural and ordinary meaning is given to the words used in s.3 of the VLA and they are read in context with the other relevant provisions of the Act, it is not immediately clear what the real intention or purpose of s.3 is. Nor is the "mischief" Parliament intended to remedy by the 2008 amendments to the VLA clear. Many of the concepts and consequences of the Act contended for by the parties are neither expressly stated in terms nor follow by necessary implication from the words used in the Act.

In determining the proper construction of s.3 of the VLA, where appropriate, regard can be had to the following:

· the Minister’s second speech of 26 February 2008.

· the first version of the Valuation of Land Amendment Bill 2008.

· the Explanatory Notes to the first version of the Bill.

· the second version of the Valuation of Land Amendment Bill 2008.

· the Explanatory Notes to the second version of the Bill.

In the Chermside appeal this Court adopted the Court of Appeal’s[26] observation that the task of the Court is to construe the language of the legislation and not the language of extrinsic material. However, the circumstances and history of the 2008 amendments to the VLA and the ambiguity associated with the words used in the Act justify the reliance placed on the extrinsic material.

[26]Lamb v Brisbane City Council (2006-2007) 152 LGERA 100 at para [37].

The Proper Construction of s.3 of the Valuation of Land Act

How the leases and trading history associated with the land and improvements thereon are to be dealt with under the VLA is critical to the parties’ positions about the appropriate valuation exercise required by s.3(1)(b). According to the appellants, at the time the unimproved value is to be ascertained, any leases must be ignored and the past trading history of the centre will make little (if any) difference to the unimproved value of the land. If that occurs, the value determined by the learned Member is manifestly too high. On the other hand, the respondent says that the leases and trading history associated with the shopping centre must be brought into account. And, as a consequence, the unimproved value under s.3(1)(b) is, in effect, the improved value of the land (including among other things the added value the leases give to the land) less the value of the improvements. The value of the improvements is essentially determined by reference to their replacement costs.

The Leases

In the case of a so called "super regional shopping centre", tenants would typically include two major department stores called "anchor tenants" (David Jones and Myers), several "major tenants" (a term which includes stores such as Coles, Woolworths, Target, Kmart etc), several "mini major tenants" (national speciality shops such as Harvey Norman, Just Jeans, Lincraft, Toys R Us, etc) and scores of independent speciality shops.[27]
[27][2007] QLC 0011 at para [29].

As has already been mentioned the appellants contend that in valuing the land under s.3(1)(b) of the VLA the valuer must ignore the existence of leases associated with the improvements on the land because, if the improvements must be assumed not to exist under s.3(1)(b), so too, must the leases associated with those improvements be assumed not to exist. And, it would be contrary to the requirement to value the fee simple of the land under s.3(1)(b) to include in that valuation the leases.

As to the first of these propositions, the respondent argues that it runs "fundamentally counter to the words of ss.3(2A) and (2C)." The respondent says about the assumption required under s.3(1)(b) of the VLA:

"89.The evident purpose of the limited fiction is to ensure that where land is improved its improved land value is to be assessed and not some other lesser value to be ascertained on the basis that the land had never been improved. The sale contemplated by s.3(1)(b) is a sale of the fee simple of the land excising for that purpose the improvements…"[28]

[28]Respondent’s written submissions, para 89.

This theme was reinforced on many occasions by Mr Fraser during oral submissions. By way of example[29] he said:
[29]Appeal record T 27 L 50 to 55.

"What (the valuer) does is that he proceeds on the basis that the improvements are there immediately before the valuation exercise is – is determined in the valuer's mind and that are there immediately afterwards. And that the tenants, who've been there in the past, haven't gone anywhere, they still have employees, stock, they've got distribution networks, they've got their own bills…"

And[30]
"… The (appellants) submission appears to flow from the circumstance that in the statutory provision which refers to improvements to a particular instance in time that that must be read as extending to leases granted with respect to the land and improvements. But when one comes to consider the notional removal and the presence both before and immediately after of the valuation exercise of the improvements it's difficult to see why that would be contemplated by the Act because there's no-one going around to the Titles Office destroying the leases that are in place.
There's no-one removing the tenants property from the premises. There's no-one stopping the tenants going in and out of the property. One might ask where will they go in that instant of time."[31]

[30]at page 77 line 1 to 17

[31]See also T76 L 10-15 (day 2).

According to the respondent the combined effect of ss.3(1)(b), 3(2A), 3(2C) and perhaps s.3(4) is that the valuer is required to proceed on the basis that:

(i) the instant before the valuation date the land accommodates a successful shopping centre with an appropriate tenant mix secured by leases;

(ii) at the time the statutory valuation is carried out the improvements do not exist but the leases either continue or are only in some way suspended for that notional time period.

(iii) immediately after the valuation date the shopping centre is back in the form it was immediately before the valuation date including leases and tenants.

This construction of ss.3.(1)(b), 3(2A) and 3(2C) cannot be correct. It ignores the fundamental requirement for the valuer to assume that, as at the time the value is to be ascertained, the improvements do not exist. There is nothing in the VLA, including the amendments to s.3, which requires for the purposes of s.3(1)(b) the valuer to take into account what has occurred on the land after the "time at which the value is required to be ascertained". In this instance that "time" is 1 October 2002.

The exercise prescribed under s.3(1)(b) requires the valuer to take as a given that the notional sale of the land is to take place on 1 October 2002 and then proceed on the basis that as at 1 October 2002 the improvements on the land did not exist. It is, as it were, that the valuer takes a snapshot in time of the subject land absent the improvements. It is the facts that exist at that time that are relevant. And, the most significant fact (albeit an assumed one) here is that there are no improvements on the land.

This approach in no way offends the operation of s.3(4) of the VLA which is concerned with assumptions about the continuing use of the land. As at 1 October 2002 the valuer would be able to assume that as at that date there were no impediments to the land continuing to be able to be used for regional shopping centre purposes (s.3(4)(a)) nor to the continuing use of improvements required to enable the land to be used for that purpose (s.3(4)(b)). Neither s.3(4) on its own or in concert with ss.3(2A) and 3(2C) provides any justification for the valuer to proceed on the basis that immediately after the relevant date all of the actual improvements will be back in place together with the associated leases and tenants.

The introduction of subsection (2A) does not assist the respondent. It makes the obvious observation that the requirement for the valuer to assume the improvements did not exist requires only a "notional removal" of the improvements. It then goes on to add a temporal qualification to that assumption. It does not have any prospective force and effect and must be read in conjunction with the words used in s.3(1)(b), which makes it quite clear that the valuation is to be struck as at the date at which the value is required to be ascertained.

The introduction of subsection (2C) in s.3 of the VLA is also of no assistance to the respondent. It simply provides that the assumption requiring the land to be valued on the basis that the improvements thereon do not exist does not require the valuer to assume also that the improvements had never existed on the land. It would require an unjustifiable gloss to be applied to the words used in these subsections to permit the valuation approach contended for by the respondent.

The amendments do not alter the fundamental underlying assumption that, as at the relevant date, the improvements do not exist. In The Valuer General v Fenton Nominees Pty Ltd[32] the High Court was concerned with the construction of s.5 of the Valuation of Land Act 1971 (SA) which is in terms not too dissimilar to s.3(1)(b) of the VLA:
[32](1982) 150 CLR 160: It was followed by the Court of Appeal NSW in Commonwealth Custodial Services Ltd v Valuer General[2007] NSW CA 365.

"̀̀ "unimproved value" of land means the capital amount that an unencumbered estate of fee simple in the land might reasonably be expected to realise upon sale assuming that any improvements thereon (except, in the case of land not used for primary production, any site improvements), the benefit of which is unexhausted at the time of valuation, had not been made; …"

The Court said:[33]

"It follows from the terms of this definition that the unimproved value of the respondent's land on 11 June 1979 was to be ascertained by reference to the capital amount that an unencumbered estate in fee simple might reasonably be expected to realize upon sale, on the assumption that the improvements then existing on the land - the Target Store and associated facilities - had not been made. It is well settled that in establishing what that capital amount might be it is necessary to inquire what the hypothetical purchaser would pay for the land in a notional condition shorn of its improvements and that it is not permissible to arrive at the figure by identifying the value of the site in its improved state and then subtracting the value of the improvements (Toohey's Ltd v The Valuer General (9))." (emphasis added)

These observations are still applicable in discerning the valuation exercise required pursuant to s.3(1)(b) of the VLA, notwithstanding the 2008 amendments. Any ambiguity or obscurity associated with the construction of s.3(1)(b) is resolved in favour of the appellants when regard is had to the relevant extrinsic material.

[33]At p.165.

The securing by way of leases an appropriate mix of tenants greatly reduces the risks associated with developing a regional shopping centre. Securing the leases also directly involves making and/or use of improvements on the land and add value to the land. Had Parliament intended to include the added value the leases give to the land it could have followed through with all the amendments to the VLA identified in paragraphs 29 and 30 above. Instead, the then proposed subsections (2B)(a) and (4)(c) were expressly abandoned for the stated purpose of clarifying that "… invisible improvements related to the value of the business that is conducted on the land are not to be included in the value of the land".[34]
[34]The objectives of the amendments to the VLA identified in the Explanatory Notes accompanying the amendment Bill in its final form: Set out in part in paras [33] and [34] herein.

To argue now that the added value leases give to the land is to be included in the unimproved value would fly in the face of the stated purposes of the changes to the Bill. However, in the course of oral submissions Mr Fraser advanced that argument on behalf of the respondent. On the third day of the appeal, he said:[35]

"The purpose in amending section 3 in our submission was to permit increases in the value of land from improvements to be taken into account in determining the value of the land. That was in the view of the legislature the essence of the so-called Nathan approach, as referred to in the extrinsic materials, and it would be very – it would be inconsistent with that purpose to suggest that the value of leases must always be excluded."

In support of this proposition the respondent relies not only on the introduction of subsections (2A) and (2C) but also the eradication of the 2003 amendments to the VLA which specifically included "intangible improvements" in the definition of improvements in s.6 of the VLA. The relevant parts of those amendments are set out in paragraphs 24 and 25 above.

[35]Appeal Transcript T 13 l 30 – 40.

Subsections (2A) and (2C) have already been dealt with.

When looked at in isolation, the removal from the definition of improvements in s.6(1), specific reference to intangible improvements, and the removal of s.6(5) tends to support the arguments advanced on behalf of the respondent. However, a review of the relevant extrinsic material and the legislation as finally passed indicates uncertainty and confusion about exactly what the intended objective of this amendment was.

The respondent contended in his written submissions:[36]

"First, the Valuation of Land Amendment Act 2008 retrospectively repealed the concept of 'intangible improvements', which had previously to be excluded in assessing the land value under s.3(1)(b). These 'intangible improvements' appeared to cover the risks of not having anchor tenants and an appropriate mix of tenants. It would be odd if the repeal of this concept made no difference to the result. Parliament must have sought to achieve, by the repeal, a purpose contrary to that for which the definition of 'intangible improvements' was originally inserted. The Explanatory Memorandum to the Valuation of Land Amendment Bill 2003 explained the introduction of this definition …

The repeal of the definition supports the proposition that Parliament no longer intends the statutory definition of 'improvements' to include intangible improvements including risk in relation to 'turnover of tenants' and 'establishing a stable and quality mix of tenants'. Indeed, this is a clear parliamentary intention because the repeal of the amendments that introduced the concept of 'intangible improvements' was made with retrospective effect."

[36]Para 37 of the respondent’s written submissions.

The submissions are clearly at odds with what in fact occurred. As already addressed, those amendments intended to include in the unimproved value of land "the making or use" of improvements on the land[37] and to eliminate the risks associated with realising the continuing use of the land[38] did not proceed for the reasons set out in the second version of the Explanatory Notes:[39]
[37]s.3(2B)(a) as first proposed.
[38]s.3(4)(c) as first proposed.
[39]See also paras [33] and [34] above.

"The objectives will be achieved by the following:
Clarify that invisible improvements related to the value of the business conducted on the land are not included in the unimproved value by modifying clauses 5 and 7. This will remove the terminology which is subject to different interpretations …
Remove the clause that states that there is no risk in realising the use of the land or continuing the use of the land for any purpose for which it is being used. This will require an amendment to clause 5."[40]

[40]The terms “intangible improvements” and “invisible improvements” were used interchangeably.

When the historical background to the amendments to the VLA are put in context it seems quite clear that Parliament did not intend the amendments to be construed in the way the respondent now contends. To conclude otherwise would render the legislative responses to the representations made by the various business representatives little more than a sham.

Once it is identified that no part of s.3 or any of the amendments to the VLA requires the valuer to have regard to the leases associated with the land, it would be nonsensical for the valuer to proceed other than on the basis that when it must be assumed that the improvements on the land do not exist so, too, must it be assumed that any associated leases do not exist. They are incapable of surviving absent the improvements.

The Fee Simple of the Land

Section 3(1)(b) also requires the valuer to assess the capital value of the fee simple of the land in its notional state. The appellants contend that a necessary consequence of the requirement to value the fee simple of the land is to value it unaffected by leases.[41]
[41]Appellants written reply (AWR), paras 3 to 5.

In the proceedings below the position of the respondent concerning this issue appears to have been consistent with that of the appellants. It was also the approach adopted by the learned Member in the Chermside case:

"… The provision in s.3(1) for unimproved value to be based on a ‘fee simple of the land’ is subject to any beneficial or burdening easement associated with the land (s.14(4)). Apart from that provision, the ‘fee simple’ must be taken as ‘a hypothetical unencumbered fee simple without regard to any restrictions on title or user other than those imposed by the general law’. Thus any leases which encumber the relevant title are to be disregarded."[42]

[42](2006) QLC 0068, para [23] and also at paras [212] and [226].

The respondent now adopts a different position based at least in part on the decision of the Supreme Court of South Australia in Perpetual Trustee Co. v Valuer General (No. 2)[43] where Debelle J said:[44]
[43](2007) SASC 340.
[44]At para [20].

"[20]An assessment of the value of an unencumbered estate in fee simple is an assessment of the value of the largest estate in land known to the law: Harry v Valuer-General (1975) 12 SASR 446 at 450. An estate in fee simple is the most ample estate which can exist in land, to use the words of Megarry and Wade, The Law of Real Property (5^th ed, 1984) at 59, which in turn is based on Coke on Littleton (19^th ed) at 11 and Williams on Real Property (23^rd ed) at 6. As Wells J said in Harry v Valuer-General at 454:

One starts with this: that what is to be valued is not the inanimate, tangible thing, land, but rights in land. The Act directs the Valuer-General to value an estate in fee simple in the land, but the purpose of a direction in that esoteric form is, in my view, to ensure that what the Valuer-General values is a congeries of the most ample proprietary rights recognized by law ‘protected along the plane of time’ (Pollock and Maitland, History of English Law (2^nd ed) vol 2, p 10); one must still ask, ‘What is the full range of proprietary rights in land, and what makes them valuable?’ Traditionally, the amplitude of rights vested in the tenant in fee simple has been equated with the fullest ultimate rights, subject to any restrictions imposed ab extra, of use, enjoyment, destruction and alienation known to the common law. (Compare the dominium of the civilians – see Buckland, Textbook of Roman Law, p. 187).
Putting aside, then, the niceties of the theory of estates, what the Valuer-General is to value (to use Pollock’s definition of ‘ownership’ – see Jurisprudence and Legal Essays, p 97) is the entirety of powers, allowed by law, of the use and disposal of a given parcel of land.

The entirety of powers to which Wells J referred in the second of those quoted paragraphs includes the power to lease land to the profit and advantage of the holder of the estate in fee simple, that is to say, the owner of the land."

According to the respondent; "there is no scope within this concept to subtract any component which a vendor of land successfully developed would expect to receive on its sale."[45]

[45]RWS at para 91.

It should be immediately observed that in Perpetual Trustee Debelle J was concerned with the definition of the "Capital Value" of land under the Valuation of Land Act 1971 (SA) which is, in terms, materially different to the wording of s.3(1)(b) of the VLA. More will be said about this below.

On appeal,[46] Bleby J (Duggan and Anderson JJ agreeing), adopted the passages from the decision of Wells J in Harry v Valuer General relied on by Debelle J and went on to say:
[46]Trust Co of Australia Ltd & Anor v Valuer General (2008) SASC 169 at para [35].

“Where the person is the owner of an estate in fee simple in land and no other person has any rights or interests in the land, one would expect the rights referred to by Wells J to yield, in the market, the highest possible value – higher than if the rights enjoyed by the owner of the fee simple were subject to the proprietary rights of some other person in the land. However, on the appellants’ case the land in question, when subject to commercial leases, has a higher market value than the market value of an estate in fee simple subject to no such leases at all. Once again, that must call in question the validity of the appellants’ argument.”

According to the respondent, this passage tends to point out the "illogicality" of the appellants' case.

There are a number of other passages relied on by the respondent:

"[56] As the LVD Judge demonstrated, there is ample justification for the conclusion that the holder of an estate in fee simple who has leased the land nevertheless remains seised and possessed of the freehold, and that receipt of rents and profits constitutes such possession. …

[58]Before turning to consider any qualification in the definition of capital value by the word ‘unencumbered’, it is convenient to state a number of relevant propositions which seem to arise from the cases considered so far:
§An estate of fee simple in land is the most extensive interest in land known to the law.
§For the purposes of assessing the capital value on the market of such an estate for rating or similar purposes, one ignores other interests in or restrictions on use of the land which are depreciatory of its value other than restrictions imposed by virtue of generally applicable legislation such as planning legislation.
§The letting of land by the owner of an estate in fee simple does not necessarily have any depreciatory effect on the value of that estate.
§While an estate of fee simple is an estate in possession of a set of proprietary rights, the expression ‘fee simple in possession’ does not mean that the owner of the estate of fee simple must necessarily have or be able to exercise physical possession of the land to the exclusion of all others.

[59]It would follow that, unless there are other qualifying considerations, the only leases that need to be ignored for the purpose of assessing the capital value of land are those that have the effect of depreciating the value or full enjoyment of the estate of fee simple.
…
[109]The Act requires a market valuation of an estate of fee simple, the highest estate in land known to the law, and one which allows the greatest possible lawful exploitation and use of the rights represented by that estate. The valuer must therefore identify the highest and best lawful use of that land. In these cases there was no dispute that, in the case of the Trust Company land, it was by way of renting the premises as an industrial park. In the case of the Perpetual land, it was the renting of the premises as a shopping centre. In both cases the parcels of land were fully developed and improved for their respective highest and best uses. Those uses necessarily involved the letting of the premises at appropriate market rentals. Entering into commercial leases and the generation of rental income was the essence of the exploitation of the highest and best use, in the same way that farming operations might be the highest and best use of agricultural land.
[110]There is nothing in the definition which suggests other than that one takes the land as one finds it at the date of valuation. In the cases at bar, that is as occupied and leased.
…

[113]… there is nothing in the Act which requires that the valuer undertake the entirely artificial exercise of assuming, for the purposes of the valuation, that the premises are vacant when in fact they are not, and that a letting up period must necessarily be assumed and rent concessions offered in order to induce tenants to take up space in the premises. Nor is it necessary to adopt any of the other alternative assumptions discussed earlier in these reasons other than the first, namely that the hypothetical purchaser purchases the land subject to all existing leases and tenancy agreements.
[114]To decide otherwise is to require the Valuer-General to value some land, for example, a group of owner-occupied residential premises, at market value and to value the same group, if commonly owned and let out to tenants, at something other than market value. It also requires that the valuation process be divorced from reality and proceed in a manner which is quite artificial and unrealistic. That should be avoided unless clearly required by the language of the Act. Such is the case in situations like that which arose in Beiler v Valuer-General, where the Act clearly required the valuation of an estate of fee simple in land which had only ever been and was only ever likely to be the subject of a crown lease. It is also the case where the Act requires the Valuer-General to arrive at a site value or unimproved value of improved land where the land could never be sold in that state. Those are undoubtedly artificial exercises. But they are required by the express words of the Act. There is an artificiality in valuing something which does not exist. That is not the same as applying a non-existent or artificial market value to something which does." (emphasis added)

The respondent relies on this reasoning to support his argument that, in valuing the fee simple of the land in the notional state required pursuant to s.3(1)(b), any leases associated with improvements on the land which add value must still be brought into account despite the improvements having to be assumed not to exist.[47] This cannot be sustained not only because of the reasons already addressed above, but because Perpetual Trustee is not persuasive for the construction of s.3(1)(b) of the VLA contended for by the respondent.
[47]Appeal Transcript – T21 L40 – L60; T22 L1 – L5; T23 L1 – L35 (day 3).

First, it is clear that in Perpetual Trustee the Full Court was concerned with the definition of "capital value" which is defined in s.5 of the legislation of South Australia as:

"Capital value of land means the capital amount that an unencumbered estate of fee simple in the land might reasonably be expected to realise upon sale, but if the value of the land has been enhanced by trees planted on the land (other than commercial plantations), or trees preserved on the land for the purpose of shelter or ornament, the capital value must be determined as if the value of the land had not been so enhanced."

This definition stands in stark contrast to the meaning given to "unimproved value" under s.3(1)(b) of the VLA. This contrast was specifically identified by Bleby J:[48]
[48]At para [15].

"[15]It was a common assumption by all parties that, as at the date of valuation, the land is taken to be developed with all existing landlord’s fixtures and improvements in their then form,^[2], and that the then existing uses were the highest and best uses of the respective parcels of land. After that, there were a number of possible alternative assumptions, the subject of debate, which need to be mentioned briefly."

The footnote to this passage reads: "Contrast the definitions of 'site value' and 'unimproved value' in s 5(1) of the Act under which it is assumed that certain relevant improvements on the land had not been made." In this context his Honour also observed that to value land on the basis that something does not exist is an artificial exercise mandated by statute and requires a different approach to valuing land where, in reality, those things do exist and are not required to be artificially ignored.[49] The valuation exercise required under s.3(1)(b) of the VLA falls into the former category .

[49]At para [114].

The contrast drawn between the definition of the capital value of land, and that of the unimproved value of land, and contrasts between the valuation exercises required to be undertaken by the valuer in respect of each definition suggests that the Full Court might have reached a different conclusion had it been concerned with an exercise of the type contemplated under s.3(1)(b) of the VLA.

In Royal Sydney Golf Club v Federal Commissioner of Taxation,[50] the High Court, dealing with the Commonwealth Land Tax Assessment Act 1910, said"

"… By s. 3 ‘unimproved value’ is defined in relation to improved land to mean the capital sum which the fee simple of the land might be expected to realize if offered for sale on such reasonable terms and conditions as a bona fide seller would require, assuming at the time as at which the value is required to be ascertained for the purposes of the Act, the improvements did not exist. … ‘Unimproved value’ in relation to unimproved land is defined to mean the capital sum which the fee simple of the land might be expected to realize if offered for sale on such reasonable terms and conditions as a bona fide seller would require.
It seems clear enough that the fee simple here means an unencumbered fee simple. Encumbrances upon land or estates in reversion appear to have been regarded as giving to reversioners or encumbrancers beneficial interests to be enjoyed by them. But the owner of the first estate of freehold was selected as the taxpayer who was to represent all persons beneficially entitled to the land. The value upon which he was to be taxed was the unimproved value of the fee simple, that is to say the capital sum which the fee simple might be expected to realize. It seems evident that the fee simple mentioned must be taken as free from encumbrances which, if they impaired the value of his estate, nevertheless operated to confer upon some other person or persons an estate or interest in the land. Were it otherwise the taxable value of the land would be diminished but the correlative estate or interest would not come into tax, unless by some chance it were an interest falling under some specific provision imposing liability. When the definitions of 'unimproved value' in s. 3 speak of ‘the fee simple’ they cannot mean, notwithstanding the definite article, that estate in fee simple which has been granted. For under s. 26 the hypothesis is that there has not been a Crown grant. In the Act as it stood before the enactment of the Land Tax Assessment Act 1914, s. 27 applied to leases from the Crown where there was no fee simple: yet s. 27 (4) (b) in conjunction with the definitions of 'unimproved value' required that a fee simple should be assumed. The expression 'the fee simple of the land' naturally means the fee simple as the highest estate unencumbered and subject to no conditions. Doubtless estates in fee simple may be granted by the Crown subject to conditions or reservations which operate only in the public interest. The corresponding advantages which ensue may be enjoyed only as of public right: they are not an interest in land enjoyed by a specific person or persons. But the Act does not draw any distinction based upon this possibility. The general policy was reflected in a general rule. The interpretation of the Act which seems best to accord with the policy appearing from its provisions and also to flow from its language is that in assessing the unimproved value an estate in fee simple must be taken as the hypothesis unencumbered and subject to no condition restricting the use or enjoyment of the land." (emphasis added)

[50](1954-55) 91 CLR 610 at 622-623 per Dixon CJ, McTiernan, Webb, Fullagar and Kitto JJ.

Following that decision the Privy Council in Gollan v Randwick Municipal Council[51] was concerned with similar definitions concerning the "unimproved value" of land. Lord Radcliffe said:[52]

"In their Lordships' opinion the consideration that led the High Court in the Royal Sydney Golf Club case to treat unimproved value under s.3 of the Land Tax Assessment Act as involving the hypothesis of 'a fee simple unencumbered and subject to no conditions' can be applied to unimproved value under s.6 of the Valuation of Land Act, and they agree with the conclusion to which those considerations led them. Prima facie, it appears to their Lordships, the 'fee simple of the land' as used in s.6 does not refer to the actual title vested in the owner at the relevant date but to an absolute or pure title such as constitutes full ownership in the eyes of the law. …" (emphasis added)

[51](1961) AC 82.

[52]At 101.

In Brisbane City Council v Valuer General[53] this Court was concerned with, among other things, ss.12(1)(a) and 12(1)(b) of the Valuation of Land Act as it then was. Section 12(1)(a) and s.12(1)(b) are in terms identical to s.3(1)(a) and s.3(1)(b) of the VLA. There was no equivalent to s.3(2A) (2B) or (2C). After referring to Royal Sydney Golf Club and Gollan v Randwick Municipal Council the Court, said:[54]

"… The rule may be summarised as that in assessing the unimproved value for the purposes of the last-mentioned Act, an estate in fee simple must be taken as a hypothetical unencumbered fee simple, without regard to any restrictions on title or on user other than those imposed by the general law."

On appeal to the High Court[55] Gibbs J, with Stephen, Mason, Murphy and Aiken JJ agreeing, proceeded on the basis of the correctness of that "rule".

Without wishing to express a final view about it there is merit in those observations. However, there are practical difficulties associated with this issue which also militate against allowing for escalating costs in the circumstances of this appeal.

While it is not entirely clear whether cost escalation was included in the analysis of the Telstra sale site there is at least a likelihood that it was not. As the respondent points out, to allow escalation in respect of the subject land but not adjust the analysis of the Telstra sale (and, accordingly, the decision of this Court in the Chermside appeal) could lead to an imbalance or distortion in the comparison of the subject land and the Chermside land.

Mr Traves SC, counsel for the appellants, acknowledged this difficulty and, in effect, conceded that if the Court has to make such adjustments to the Telstra sale and the Chermside decision, so be it.[130] The difficulty is that there have been no submissions as to how this should be done. As the respondent pointed out, among other things, differences in time and the nature of the site works involved would have to be taken into account.
[130]Appeal record T16 L12-L40 (day 2).

In all the circumstances, including that this matter was not squarely raised in the appellants’ grounds of appeal, there should be no adjustment to take account of any increases in construction costs.

The Construction Period

The learned Member identified that his task was to adopt the construction programme which reflected what the prudent purchaser would do in the market place.[131] After a detailed analysis of the evidence he concluded that a reasonable construction period for the site works was 21 months[132] comprising about 4 months for design and 17 months for construction.
[131]At [111].
[132]At [115].

The appellants contend that the period should be 37 months. No issue is taken with the 4 month design period nor with the 17 month construction period. They do contend, however, that actual design and construction would not commence until the owner gave his approval to commence the project. That would not occur until steps such as concept refinement and tenant commitments had been finalised. Concept refinement begins immediately after the relevant development approvals are in place. The time taken to refine concepts and secure tenants is said to be about 16 months. Therefore, according to the appellants, holding costs, including rates and land tax and cost escalation over that period have to be brought into account. For reasons already given there is no need to consider the question of escalating costs further.

The respondent does not dispute that there is evidence to support the facts as contended for by the appellants. Rather, it is submitted that as a matter of principle no allowance should be made for the extended timeframe. That is so, according to the respondent, primarily, because the learned Member’s approach was correct and also because of the 2008 amendments to the VLA.

The learned Member developed reasons for adopting 21 months,[133] but did not deal with the matters now agitated by the appellants. It is likely, that he did not regard those matters as relevant having regard to the approach he took to s.3(1)(b).
[133]At paras [108] – [115].

The second point is of more significance. The respondent correctly contends that there is no basis for going beyond the statutory fictions created under s.3 of the VLA. And, further, that the valuer is to proceed on the basis that the highest and best use is known, that the DA is in place and the details of the shopping centre on the site would be known. It may be presumed that the respondent particularly relies on ss.3(2A) and 3(2C) in support of the last of the contentions.

The appellants do not dispute that the valuer should proceed other than on the basis that the highest and best use is known and the relevant DA is in place. Further, it seems to us that it would be more consistent with s.3(2C) of the VLA for the valuer to proceed on the basis that there would be no delays associated with finalising and refining design and construction concepts. According to the programme flow chart tendered in aid of argument that step or process takes about 10 months.

However, consistent with the conclusions that the land is to be valued at the relevant date as it if were effectively vacant and absent the leases and tenants, it is appropriate to allow a period for securing leases. The programme flow chart indicates that process would take about 8½ months from the completion of the design phase to the time the owner would commence site works.

It is appropriate to allow holding charges for a period of 29½ months.

Holding Costs, Land Tax and Rates

The appellants submitted that the land tax and rates should be calculated on the unimproved value of the land, presumably as determined by this Court, and not the statutory valuation current at the time. This approach is contrary to the approach adopted by this Court in the Chermside Appeal[134] and there was no appeal against that finding.
[134]At [100].

In such circumstances, we would only be prepared to depart from that approach if there were persuasive grounds for doing so but there are none. Accordingly, land tax and rates should be calculated on the then current statutory valuation of $40,000,000.

It is appropriate, however, when calculating the cost of holding the land while idle, to use the unimproved value of the land as at 1 October 2002 as determined by the Court.

Conclusion on Site Works and Holding Costs

The only necessary changes to the relevant findings of the learned Member are to:

(i) adopt an interest rate of 7% and not 5.35%.

(ii) extend the construction period from 21 months to 29½ months.

(iii) calculate rates and land tax on $40,000,000 and not $128,200,000.

(iv) calculate “land holding” costs based on the unimproved value of the land as determined by this Court.

By reference to the calculations carried out by the learned Member in the Pacific Fair case,[135] the relevant calculations are:
[135]At [117].

· Total site works and penalties = $18,013,000

· Interest on construction (½ of 29½ months @ 7%) = $1,550,000 [136]
[136]29.5 months = (2.46 years ÷ 2) x 7% = 0.086.

· Land holding at 7% for 29½ months = (about) $7,600,000 [137]
[137]Based on land component of $44M.

· Rates and land taxes (2.65% for 29½ months

on $40,000,000) = $2,600,000 [138]

Value of site improvements (adopt) = $30,000,000

[138]29.5 months = (2.46 hears x 0.265%0 = 0.065.

Conclusions

While the evidence concerning the subject matter of this appeal is not entirely satisfactory the adoption of the decision of this Court in the Chermside appeal is the most appropriate starting point for the determination of the unimproved value of the subject land. Furthermore, the general approach adopted by the learned Member as outlined above[139] is to be preferred to any other methodology.
[139]At para [148].

Accordingly, the unimproved value of the subject land is $47,490,000. This figure is derived by deducting from the site improved value ($73,590,000) and the value of development approvals ($3,900,000) the value of the site works ($30,000,000).

The Fresh Evidence Application

Before disposing of this appeal one final matter needs to be addressed. On 30 July 2008, two clear business days before the hearing of this appeal was to commence, the respondent filed an application to adduce fresh evidence. This evidence fell into two categories, namely, evidence of the “indexed valuation” already referred to above, and various documents primarily concerned with headworks charges associated with a rezoning application concerning the Telstra sale site in 1995 to 1996.

The appellants did not oppose the admission the “indexed valuation” of the subject land but opposed the admission of all of the second category of documents including a valuation exercise carried out by Mr Montgomery, the valuer relied on by the respondent in the proceedings below.

After hearing argument and considering the documents sought to be tendered by the respondent the application was refused on the first day of the appeal. Following are the reasons for that refusal.

The reasons for these documents to be before the Court are articulated in the respondent’s application in the following terms:

“A factor relevant to the unimproved value of the subject land was the significance of the sale of land located at Banfield Street at Chermside – the ‘Telstra’ land. The analysis of that sale depends on the infrastructure and other costs required to be spent on that land to achieve planning approval to allow for the ‘Telstra’ land to be developed as shopping centre land. This factor concerns documents (2) – (10) below.”

And
“As to document categories (2) – (10), these documents concern analysis of the unimproved value of the ‘Telstra’ land. Given the significance of the sale of that land to the decision under appeal, it is submitted that admission of that additional evidence is necessary to avoid grave injustice. It is submitted that the application otherwise satisfies the requirements of s.56 of the Land (Court) Act.”

Mr Fraser conceded during his oral submissions that, absent there being a failure on the part of the appellants to meet their obligation to disclose all directly relevant documents, the respondent would not seek to bring himself within the operation of s.56[140] of the Land Court Act 2000. However, according to Mr Fraser, the respondent had at least established a prima facie case of non-disclosure. There was no suggestion that the documents had been deliberately concealed by the appellants and/or their lawyers.
[140]Day 1, T18 L18–22; T19 L4-10.

The appellants opposed the introduction of this fresh evidence on two grounds — there was no duty to disclose the documents and, there are a number of “discretionary matters” which ought, in any event, prevent the respondent introducing them at this stage of the proceedings.

As to the first of these matters, Mr Doyle submitted that it could not be reasonably concluded that the documents were ever in the possession of or under the control of his clients. And, in any event, they were not relevant to the issues in the appeal.

The documents are primarily concerned with the rezoning of the Telstra land to facilitate the amalgamation of that land with adjoining land falling under the Chermside Regional Centre Development Control Plan (DCP) area of the Brisbane City Council (BCC).[141] This was a necessary step in the then planned expansion of the regional Chermside Shopping Centre on to the Telstra land by Coles Myers Property Limited (Coles) in the mid 1990s. Of particular importance, according to the respondent, were the then agreed infrastructure costs of which the contribution of Coles was to be $8,260,000.[142]
[141]See generally documents in affidavit of Mr G Sammon, para 9 and Ex GPS4.
[142]Infrastructure Deed, part of Ex GPS4 at p48.

The expansion of the shopping centre over the Telstra land by Coles did not proceed. It seems that Coles sold the Chermside Shopping Centre to PT Limited via 3 transactions the last of which occurred in December 1999. The centre was then transferred to Westfield Management Limited (Westfield) on 28 June 2000. On 22 December 2000 (settlement on 5 December 2001) Telstra Corporation Limited (Telstra) sold its land to Westfield which did not proceed with the expansion project initiated by Coles.[143]
[143]T6 L10.

PT Limited was one of the appellants in the Chermside proceedings but is not a party to this appeal. However, Westfield was and is a party to both. The instructing solicitors for the appellants in this appeal were also the solicitors acting for PT Limited and Westfield in the Chermside proceedings and the solicitors who acted for Coles in the rezoning application to the BCC. Mr R Bowie of Minter Ellison Lawyers, is the partner of the firm relevantly involved. Further, Mr Andrew Robertson, while an employee of Coles, was involved in the rezoning negotiations with the BCC. In the Chermside Case before the Land Court, Mr Robertson, who was by then an employee of Westfield Limited, gave evidence in support of the case for the appellants including PT Limited and Westfield.[144]
[144]For example Ex 15 in the Chermside Case.

The position of the respondent was, given the involvement of Mr Bowie and Mr Robertson in all of these transactions and proceedings, there was at least a prima facie case that the documents, save for Mr Montgomery’s valuation exercise, were in the possession or under the control of the appellants in this appeal.

In response to this application an affidavit of Mr R Bowie was relied on by the appellants. His affidavit relevantly states that:

(a) The rezoning documents that he “had” were always held by his firm for Coles and not for any other party.[145]
[145]At para 3.

(b) Enquiries of Westfield Management Limited and PT Limited, while still continuing as at 4 August 2008, had not revealed the documents.[146]
[146]At paras 5 and 6.

(c) He had been advised by Mr Robertson that there was no reason why the infrastructure deed between Coles and the BCC concerning the rezoning of the Telstra land would have been provided to the purchaser during the sale of the Chermside shopping centre from Coles and he did not believe that it was.[147]

Mr Bowie was not required for cross examination and there is no evidence that the documents were provided by Telstra or anyone else to PT Limited or Westfield when the purchase of the Telstra land took place.

[147]At para 7.

There is a duty imposed on parties to litigation to disclose documents which are directly relevant to matters in issue in the litigation and which are in their possession or under their control.[148] The Court has the power to make specific orders relating to disclosure[149] where there is an “objective likelihood” that the duty to disclose has not been complied with or the documents passed out of the possession or control of a party.[150]
[148]R211(1) UCPR.
[149]R223(1) and (2), UCPR.
[150]R223(4) UCPR.

For the respondent to have succeeded in his application he would have to at least show that there was an objective likelihood that the appellants’ duty concerning disclosure was not complied with. There is no suggestion that the documents might have otherwise passed from the possession or control of the appellants.

The circumstantial evidence relied on by the respondent fails to establish such an objective likelihood in the face of the uncontradicted evidence of Mr Bowie.

That finding should dispose of the application. Out of deference to the other submissions made by Mr Doyle they will be considered and assume that the documents were in the possession of or under the control of the appellants.

Mr Montgomery produced what he described as a “Reanalysis of the Telstra Sale” bringing into account the so called “rezoning costs” of $8,260,000 referred to above.[151] This “reanalysis” results in a much higher site value for the Telstra land than applied by this Court in the Chermside Appeal. According to Mr Montgomery, this exercise is necessary to allow a “proper comparison” with the Chermside site to be made.[152]
[151]Affidavit of Mr Montgomery, Ex SMR2 at p 7.
[152]At para 7.

The respondent has failed to show that the documents are directly relevant to the matters in issue in this appeal for the following reasons. The “rezoning costs” used by Mr Montgomery related to a proposal in the mid 1990s that did not proceed. They were concerned with a “specified development” as defined in the deed that did not proceed and which included the demolition of the Telstra buildings.[153] The evidence is that when the Telstra land was purchased in December 2000, some four to five years after the council documents now sought to be relied on by the respondent came into existence, Westfield had no intention of proceeding with the project being pursued by Coles. The land was purchased for two primary reasons to prevent a competitor commencing retail activities on the land and to allow for further expansion of the Chermside Shopping Centre sometime in the future.[154] While development of part of the land for some form of retail development might have occurred by 30 April 2005, expansion of the regional shopping centre was not to commence until 1 April 2011.[155] On that basis the land and the building thereon was in fact leased back to Telstra for a period of about 10 years.[156]
[153]Affidavit of Mr Sammon, Ex GPS4, p 59.
[154]Chermside Case (2006) QLC 0068.
[155]Ibid paras [251] – [252].
[156]Ibid para [252].

Given the factual circumstances surrounding the sale of the Telstra land in late 2000, the documents, and in particular the so called “rezoning costs”, are not necessary for a “proper” analysis of this sale. It could not be inferred that by the time any material retail activity was to occur on the Telstra land most of the terms and conditions imposed in association with the proposed rezoning and development in the mid 1990s would still be applicable or otherwise relevant.

Further, as was pointed out by Mr Doyle,[157] the relevant exercise in determining the value of the Chermside land was concerned with comparing it with Telstra land on a site improved basis and then making the necessary adjustments for site works.[158] To notionally bring the Telstra land as at December 2000 to a state where the infrastructure necessary to facilitate a shopping centre development was identified and paid for is not relevant to the exercise.
[157]T22 L15-50.
[158]See Chermside Appeal (2007) QLAC 0077 paras [89] to [101].

Accordingly, the documents in question would be neither admissible or required to be disclosed on the grounds of relevance.

For the reasons expressed above it is not necessary to finally dispose of Mr Doyle’s submissions concerning the discretionary grounds for refusing this application but there would be strong grounds for refusing the application on those grounds.

There is little doubt that had Mr Montgomery’s so called “reanalysis” of the Telstra sale and the documents relied on to support it been admitted, this appeal would have to be adjourned.

The valuation appealed against was determined as at 1 October 2002. The Land Court proceedings commenced 8 November 2004 and occupied 55 Court days. The decision appealed against was handed down on 2 March 2007. The commencement date for the hearing of this appeal was set on 26 May 2008 after the respondent opposed an application by the appellants for earlier appeal dates. The respondent became aware of and had access to the documents on 30 June 2008. Despite having known that the introduction of this material together with the valuation exercise carried out by Mr Montgomery would be likely to require an adjournment of the appeal, the appellants were not advised of the intended application until about 3pm on 28 July 2008. Regardless of whether the delay in advising the appellants of this intention was tactical or not, it had the effect of materially limiting the appellants response time to it, making the adjournment of this appeal almost inevitable were the documents to be admitted. No attempt was made to explain the delay between 30 June and 28 July 2008.

Further, as Mr Montgomery acknowledged in his affidavit,[159] a “significant issue” in the proceedings before the Land Court was application of the Telstra sale. The affidavit of Mr Montgomery makes it clear that the material now sought to be relied on would have been readily available to the respondent at the time of the proceedings in the Land Court. All that was required was an enquiry at the offices of the BCC. No explanation was given about why those enquiries were not made at a much earlier stage of proceedings.
[159]At paras 3 and 5.

In Yevad Products Pty Ltd v Brookfield,[160] a case referred to by Mr Fraser, the Full Court of the Federal Court recognised that, in deciding whether or not to order a new trial in circumstances where there has been a form of misconduct on the part of a party concerning discovery/disclosure, some flexibility is required in “weighing the competing factors with the overriding purpose being to reconcile the demands of justice with the interest in the finality of litigation …”.[161]
[160][2005] FCAFC 177 (31 August 2005) at paras [122] to [126].
[161]At [128].

A similar degree of flexibility would be involved in weighing up the interests of justice to the parties to this appeal. And, in the circumstances of this appeal, including that there is no suggestion that there had been any deliberate behaviour on the part of the appellants and/or their lawyers, strong discretionary grounds exist for refusing the admission of the documents sought to be relied on by the respondent. The issues raised in this application can be readily distinguished from those which arose in State of Queensland v JL Holdings Pty Ltd[162] where it was likely that any disruption caused by the amendment could be accommodated.[163] To admit this material would have caused last minute disarray and an adjournment of the appeal to the next sittings of this Court.
[162](1997) 189 CLR 146.
[163]At p 154 per Dawson, Gaudron and McHugh JJ; to a similar effect Kirby J at 170-172.

Orders

1. The appeal is allowed.

2. The order of the Court below is set aside.

3. The unimproved value of Lot 13 on Registered Plan 866294, Parish of Gilston as at 1 October 2002 is determined at Forty Seven Million Four Hundred and Ninety Thousand Dollars ($47,490,000).

WHITE J

CAC MACDONALD
PRESIDENT OF THE LAND COURT

RS JONES
MEMBER OF THE LAND COURT

CITATION:	Kent Street Pty Ltd & Ors v Department of Natural Resources and Mines [2008] QLAC 0221
PARTIES:	Kent Street Pty Ltd (ACN 006 794 654) as Trustee; Westfield Management Limited (ACN 001 670 579) as Responsible Entity of Westart Trust, AMP Pacific Fair Pty Ltd as Trustee and Westfield Management Limited (ACN 001 670 579) as Responsible Entity. Appellants v Chief Executive, Department of Natural Resources and Mines Respondent
FILE NO:	LAC 2007/0033
DIVISION:	Land Appeal Court of Queensland
PROCEEDING:	Appeal
ORIGINATING COURT:	Land Court of Queensland
DELIVERED ON:	19 December 2008
DELIVERED AT:	Brisbane
THE COURT:	White J Mrs CAC MacDonald, President of the Land Court Mr RS Jones, Member of the Land Court
ORDERS:	1. The appeal is allowed. 2. The order of the Court below is set aside. 3. The unimproved value of Lot 13 on Registered Plan 866294, Parish of Gilston as at 1 October 2002 is determined at Forty Seven Million Four Hundred and Ninety Thousand Dollars ($47,490,000).
CATCHWORDS:	STATUTES – ACTS OF PARLIAMENT – INTERPRETATION – CONSIDERATION OF EXTRINSIC MATTERS – PREVIOUS STATE OF LAW AND MISCHIEF TO BE REMEDIED – this Court had previously given a decision dealing with many of the issues agitated in the appeal – Parliament amended the applicable legislation, the Valuation of Land Act 1944 (Qld), after the previous appeal, and after the primary decision in this matter – the amendments to the legislation had retrospective effect – the amendments appear to be targeted at altering the outcome of this appeal - whether regard can be had to extrinsic material relating to the amendments in construing the Valuation of Land Act 1944 (Qld) REAL PROPERTY – VALUATION OF LAND – UNIMPROVED VALUE – VALUE OF IMPROVEMENTS – valuation of land under the Valuation of Land Act 1944 (Qld) – the Act requires that the valuation be conducted by assuming that at the time of valuation the land is unimproved – whether the valuer is to assume that existing leases continue over the unimproved land – whether the valuer is to assume that the existing leases will exist immediately after the time of valuation REAL PROPERTY – VALUATION OF LAND – UNIMPROVED VALUE – GENERALLY – valuation of land under the Valuation of Land Act 1944 (Qld) – the Act requires that the valuation be conducted by assuming that at the time of valuation the land is unimproved – whether the valuation is conducted on the assumption that after the time of valuation the improvements can be restored without any risk REAL PROPERTY – VALUATION OF LAND – UNIMPROVED VALUE – GENERALLY – valuation of land under the Valuation of Land Act 1944 (Qld) – the valuer must assess the capital value of the fee simple of the land – whether the value of the fee simple includes the value of leases over the land PROCEDURE – DISCOVERY AND INTERROGATORIES – DISCOVERY AND INSPECTION OF DOCUMENTS – DISCOVERY OF DOCUMENTS – GENERALLY – the appellant applied to introduce certain documents as fresh evidence – whether the respondent had a duty to disclose those documents – whether the fresh evidence should be admitted Acts Interpretation Act 1954 (Qld), s 14B, s 20 Land Court Act 2000 (Qld), s 56 Uniform Civil Procedure Rules 1999 (Qld), r 211, r 223 Valuation of Land Act 1944 (Qld), s 3, s 5, s 6, s 13, s 45, s 101, s 101A, Barnwell v Valuer General [1989] 13 QLCR 13 at 17, cited Brisbane City Council v Valuer General (1975) 2 QLCR 254, referred to Brisbane City Council v Valuer General (1978) 140 CLR 41, cited Commissioner for Prices and Consumer Affairs (SA) v Charles Moore (Aust) Ltd (1977) 139 CLR 449, cited Commissioner of Land Tax v Nathan (1913) 16 CLR 654, discussed Commonwealth Custodial Services Ltd v Valuer General [2007] NSW CA 365, cited Daniell v Federal Commissioner of Taxation (1928) 42 CLR 296, discussed Determination of Valuer General v Shire of Esk (1972) 39 CLLR 130, applied Fischer v Valuer General [1983] 9 QLCR 44, cited Gollan v Randwick Municipal Council (1961) AC 82, referred to Grahn v Valuer General [1992] 14 QLCR 327, cited Kiddle v Deputy Federal Commissioner of Land Tax (1920) 27 CLR 316, cited Lamb v Brisbane City Council (2006-2007) 152 LGERA 100, cited McGeoch v Federal Commissioner of Tax (1929) 43 CLR 277, cited Perpetual Trustee Co. v Valuer General (No. 2) (2007) SASC 340, discussed PT Limited & Anor v Department of Natural Resources and Mines [2006] QLC 0068, related PT Limited & Anor v Department of Natural Resources and Mines [2007] QLAC 77, related Royal Sydney Golf Club v Federal Commissioner of Taxation (1955) 91 CLR 610, discussed Spencer v the Commonwealth (1907) 5 CLR 418, distinguished State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146, distinguished Tetzner v Colonial Sugar Refining Co Ltd (1958) AC 50, cited The Valuer General v Fenton Nominees Pty Ltd (1982) 150 CLR 160, referred to Toohey's Ltd v Valuer General (1925) AC 439, referred to Trust Co of Australia Ltd & Anor v Valuer General (2008) SASC 169, discussed Trust Co of Australia Ltd v Valuer General (2007) 154 LGERA 437, cited Yevad Products Pty Ltd v Brookfield [2005] FCAFC 177, discussed
APPEARANCES:	Mr S Doyle SC and Mr R Traves SC and Mr JM Horton of counsel for the appellants Mr DB Fraser QC and Mr P Flanagan SC and Mr T Quinn and Mr G Del Villar, for the respondent
SOLICITORS:	Mr R Bowie and Mrs A McDonnell – Minter Ellison Lawyers for the appellants Dr G Sammon of Crown Law, for the respondent